住友电工上调InP衬底扩产至180亿日元，反映AI光通信材料供需紧张但消息已传播

[News] Sumitomo Electric to Raise InP Substrate Expansion Scale With JPY 18 Billion
As per Nikkei , Sumitomo Electric Industries has significantly expanded its indium phosphide (InP) substrate investment plan, committing approximately JPY 18 billion (USD 120 million) to upgrade existing production lines. The company aims to increase InP substrate capacity to 3.1 times its fiscal 2024 level by fiscal 2028, responding to surging demand for high-speed optical communication components driven by AI data center deployments.

Sumitomo Electric is one of the world’s leading advanced materials manufacturers, with strong positions in compound semiconductor substrates, communication cables, and electronic components. InP substrates serve as the fundamental material for high-speed optical modules and optical transceiver chips, making them indispensable for 800G and 1.6T optical transceivers deployed in AI computing infrastructure. Together with JX Advanced Metals, Sumitomo Electric accounts for a dominant share of the global InP substrate market, with high-end optical communication substrates remaining heavily concentrated among Japanese suppliers.

The revised investment plan represents a substantial increase from the company’s previous roadmap. Under a plan announced in November 2025, Sumitomo Electric had targeted capacity of only 2.4 times its fiscal 2023 level. However, accelerating AI server construction has driven demand for high-speed optical devices well beyond earlier expectations, which prompts the company to expand both investment and production targets.

The expansion will be carried out at the company’s Itami Works in Hyogo Prefecture, Japan, where existing manufacturing facilities will be upgraded rather than supplemented with new buildings. By leveraging established production lines, Sumitomo Electric expects to bring additional capacity online more quickly while minimizing construction time.

The move reflects broader industry dynamics. As AI model training and inference clusters continue to scale, demand for high-speed optical interconnects has surged; in this context, optical module manufacturers decide to secure long-term supply agreements for InP substrates. However, delivery lead times have lengthened, while spot prices continue to rise.

Given the technical complexity of InP single-crystal growth and the multi-year qualification cycle required for new production lines, meaningful capacity additions remain difficult to achieve in the near term, making expansion projects by leading substrate suppliers increasingly critical to narrowing the industry’s supply-demand gap.

The JPY 18 billion investment is dedicated exclusively to Sumitomo Electric’s InP substrate business and does not include capacity expansion for other communication products such as optical fiber or connectors. As of the report’s publication, the company had not disclosed the annual investment schedule, phased production ramp timeline, or a detailed breakdown of spending across equipment procurement, process development, and production-line commissioning.

The announcement also comes amid a broader wave of capacity expansion across the industry. Fellow Japanese supplier JX Advanced Metals has previously unveiled a large-scale investment plan to largely expand its own InP substrate production. Meanwhile, optical chip and optical module manufacturers worldwide are increasingly securing long-term supply agreements with leading substrate vendors, which reflect the sustained growth outlook for the compound semiconductor materials sector.

(Photo credit: Sumitomo)

Please note that this article cites information from Nikkei .